ROME – World food prices fell for the first time in eight months in March after record highs largely due to oil prices, though the situation remains volatile, the UN’s food agency said on Thursday.
The Food and Agriculture Organisation’s Food Price Index dropped to an average 230 points in March, down 2.9 percent from its peak in February, but still 37 percent above March 2010, the Rome-based agency said.
“The decrease in the overall index this month brings some welcome respite,” said David Hallam, director of the FAO’s trade and market division.
“But it would be premature to conclude that this is a reversal of the upward trend,” he added.
The FAO index, which monitors average monthly prices for key staples, showed international prices for oils, sugar and cereals in particular had dropped.
Rice prices also fell, largely as a result of abundant supply in exporting countries and sluggish import demand. By contrast, dairy and meat prices rose.
“The biggest story is the oil sector, that’s the driver behind the decline in prices,” said Abdolreza Abbassian, FAO economist and grains analyst.
“The drop was driven by sell-offs in the market, but didn’t last,” he said.
“We saw a decline only in the first two weeks of March. In the second half of the month prices rebounded. Most of the price increase is not captured in this index but is likely to be reflected in the next one,” he said.
March was also extremely volatile for grains, largely due to growing economic uncertainties and the turmoil in North Africa and parts of the Near East as well as the Japanese earthquake and tsunami, the FAO said.
